Sparse, Time machine and Itunes Problems

It all started when i was trying to run my itunes from my external WD hard drive. My mission was to try and keep all my playlists and my library on the mac so i could see what i had and keep the actual songs on the exHD ( knowing that i wouldn't be able to hear the track's unless my exHD was plugged in). I took the whole itunes folder and dragged it to my hard drive, everything vanished, noob mistake I have had the "two main box's" checked which were to keep everything organised and the other to make a hard copy of the music into the itunes folder. After talking to an member of staff at apple, he has told me to drag everything back in, consolidate, export playlists, remove the itunes folder again back to my exHD, import the exported playlists, and then import my music from the hard drive (don't really understand the last part as i wanted to keep it on the hard drive to save space?!)
As I've gone to drag this all in i realise for some reason i don't have enough space, although it all was on there before. I have a 250Gb internal drive with 28Gb free at the moment, this is without the 60Gb music collection I have now put on the ex HD. I use logic and have a 70Gb file of my tunes. This file with the free space is practically 100Gb and was wondering where all the space was being taken up as i don't really use my mac for anything else. I downloaded Grand perspective which is an app used to scan the HD and bring up a little diagram of how much space is being used up by what.
This is where the sparse part come in.
Its showing I have a 142Gb Sparse bundle. I use time machine and i dont know if it makes a difference but i also use Data vault which the apple guy said wasn't necessary, and through my research have realise i don't need it. Tried to turn that off but need's alot of space to do so, found out that it needs at least half the space to move all the encrypted data, but thats another problem that needs my HD space. So main questions are..

1.Can i delete this sparse bundle without if affecting anything as i'm using time machine, freeing up my HD?
2.How do i get to it so i can delete it properly/safely?
3.Any other tips that you think is handy to know or your own views/experience about Sparse, Itunes Handling and Time machine

Thanks a lot if anyone could lend a hand to someone who has tried looking around for them self and big thanks to people who have posted before and helped the silent surfers!

Correct me if I'm wrong, but I read from your post that you are using File Vault.
Do *not* in any circumstance mess with that sparse bundle! Delete it and you may as well have tossed your computer into the Marianas Trench, your information will be gone forever. (You have a backup using TimeMachine so you could recover the info, but save yourself a lot of trouble and stay away from that file)URGENT HELP!! FileVault and Sparse Image - Mac Forums

STAY AWAY FROM FILEVAULT .....
I had a similar problem to you and in this thread you will find my solution. Its not pretty but it worked for me, as i didnt get any definite answer from here in M-F or  Support. I did research and its the omly way i could find out how to turn it off, and keep all my data as well .... Bit of a read but worth it Peoples Take on Filevault
Good luck and keep us posted

Cheers

Dont forget to use the Reputation System if someone has helped you out !!!Arguing with a zealot is only slightly easier than tunneling through a mountain with your forehead!!!!!MoTM☆☆☆